Memory chips grow at a high end? Samsungs revenue cut after record breaking

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 Memory chips grow at a high end? Samsungs revenue cut after record breaking


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Samsung Electronics, South Koreas IT giant, announced spending cuts after delivering a record performance. There is a view that the memory chip boom that has lasted for two years is over.

On Oct. 31, Samsung released its third-quarter results for 2018, and its profits and revenues rose sharply, breaking a record. Samsungs profits reached a record 17.57 trillion won ($15.5 billion) in the third quarter ended September, up 21% from a year earlier, CNBC reported the same day. The combined quarterly revenue reached 65 trillion and 460 billion won, an increase of 5.5% over the same period last year.

Samsung said the results were boosted by strong sales and increased production of memory products, mainly for smartphones and data centers. In addition, the higher demand of the main customers on the OLED display panel has also promoted the performance.

But looking ahead, Samsung said its overall revenue would decline as semiconductor demand seasonally declined.

Samsung said it expects fourth-quarter earnings to fall from a year earlier due to low demand for memory chips and increased marketing costs for smartphones during the holiday season, Reuters reported on October 31. Samsung also said, Looking ahead to 2019, earnings in the first quarter of 2019 will be weak due to seasonal factors, but earnings will increase with the improvement of the business environment, especially the memory market.

To that end, Samsung announced that it would cut its capital spending by more than a quarter this year, and that its capital expenditure in 2018 would fall 27% to 31.8 trillion won ($28 billion) from last years record-breaking 43.4 trillion won.

Samsung also warned investors that the companys next quarter profits would fall. Reuters believes that this means the end of the high-speed growth period of the global market chip.

Some analysts said that reducing capital expenditure would alleviate fears of increased supply and lower prices for some memory chips, as prices have fallen to more than two years low and competitors will start new production lines next year.

Song Myung-sup, an analyst at HI Investment Securities, said, Toshibas new production line will be launched, and SK Hynix has also started one of the mass-produced flash production lines. The price of flash chips (NAND) will continue to decline in the first half of next year, and the supply surplus will continue. Samsung tried to calm investorsfears of a sharp downturn in the chip market, saying demand for servers was strong because of the rapid growth of the worlds cloud data services. Chun Sewon, Samsungs senior vice president of memory marketing, told analysts, There are always short-term price changes, but fundamentally we have a very strong demand base for memory. He also said the company believed that this was the beginning of a virtuous cycle of chip sales in the server industry. Samsung also said it was considering switching part of its NAND production line to DRAM chips in 2019, without increasing capacity in case of excess flash chips. Source: surging news editor: Qiao Jun Jing _NBJ11279

Song Myung-sup, an analyst at HI Investment Securities, said, Toshibas new production line will be launched, and SK Hynix has also started one of the mass-produced flash production lines. The price of flash chips (NAND) will continue to decline in the first half of next year, and the supply surplus will continue.

Samsung tried to calm investorsfears of a sharp downturn in the chip market, saying demand for servers was strong because of the rapid growth of the worlds cloud data services.

Chun Sewon, Samsungs senior vice president of memory marketing, told analysts, There are always short-term price changes, but fundamentally we have a very strong demand base for memory. He also said the company believed that this was the beginning of a virtuous cycle of chip sales in the server industry.

Samsung also said it was considering switching part of its NAND production line to DRAM chips in 2019, without increasing capacity in case of excess flash chips.